Kiwi Slumps as RBNZ Says Next Move in Rates is Likely to be A Cut
The Kiwi slumped more than 1.5% against the U.S. dollar on Wednesday in Asia after the Reserve Bank of New Zealand (RBNZ) unexpectedly said the next move in rates is likely to be a cut.
The NZD/USD pair last traded at 0.6796, down 1.55% by 12:01 AM ET (04:01 GMT).
The plunge in the Kiwi came after the RBNZ kept the interest rate at 1.75% but said in a statement that the “next rate move is likely down.”
Following the central bank’s unexpected change in language on interest rates, economists from ANZ reportedly said the RBNZ is likely to cut rates in November this year, while an earlier cut is also possible.
Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies was up 0.2% to 96.393.
An inversion of the U.S. yield curve dented investor sentiment and was cited as the main catalyst for a sharp stock selloff and a headwind for the dollar late last week.
High-level officials from the U.S. and China, including top trade negotiator Robert Lighthizer, and Treasury Secretary Steven Mnuchin are set for another round of trade talks later this week in Beijing.
Lighthizer told National Public Radio in an interview this week that he wants to get a deal, but he’s “not necessarily hopeful” one will happen. “We’re working on it,” Lighthizer said. “If there’s a great deal to be gotten, we’ll get it. If not, we’ll find another plan.”
Meanwhile, the USD/CNY pair was little changed at 6.7148 after data showed profit of large Chinese industrial firms dropped 14% year-on-year to 708.01 billion yuan ($105.50 billion) in the January-February period, the fastest pace since 2011.
The GBP/USD pair slipped 0.1% to 1.3189. U.K. lawmakers backed a move on Monday for parliament to take control over the Brexit process from U.K. Prime Minister Theresa May.
U.K. lawmakers will now vote on a range of options over the path of Brexit on Wednesday in an attempt to break the current Brexit impasse.
The USD/JPY was unchanged at 110.62.